Client Bulletin #574
We are sending you this bulletin because of an important legal development that pertains to all employers. The U.S. Department of Labor has issued the final version of its “persuader rule,” which will be formally published in tomorrow's Federal Register. The rule is scheduled to take effect on April 25, 2016, and will apply to "arrangements, agreements, and payments made on or after July 1, 2016," according to the U.S. Office of Labor-Management Standards. This bulletin is intended to describe the essence of this new rule and to briefly discuss some of the implications for employers.
Since 1959, arrangements between employers and “labor persuaders” have been subject to reporting requirements with the DOL. These requirements have historically not been triggered unless a lawyer or consultant has dealt directly with employees in an attempt to affect their support during the course of a union organizing campaign. The advice of attorneys, however, has been exempt from the reporting requirements as privileged and confidential attorney-client communications, provided that 1) the attorney limits his or her services to advice, which the client is free to accept or reject, and 2) the attorney avoids direct communications with bargaining unit employees. This arrangement has worked well for more than 50 years and has allowed us to effectively represent each of you in union organizing and NLRB elections without undermining the sanctity of the attorney-client relationship.
Once the new rule goes into effect, this advice exemption will be dramatically narrowed. The new rule will require both the attorney and the client to report all arrangements in which “an object” of the services is to persuade employees in the exercise of their right to engage in union organizing. These reports must be filed electronically and, once filed, become public records. For example, an attorney-developed campaign communication which was intended for client review and approval, would not have been subject to any reporting requirements in the past. That same communication would now trigger the need to report – even if the attorney simply reviewed a letter or speech initially prepared by the client. While this change in and of itself is significant, there will be many others. We intend to review and educate all of our clients on the full extent of these changes in the near future. Some of our prior coverage of the proposed changes to the Persuader Rule can viewed via the following links:
The new regulations expand the scope of activities that will trigger the reporting requirements. In addition, once the obligation to report has been triggered, the type and amount of information that must be provided has been expanded as well. These expanded requirements will entail the filing of annual reports revealing how much the client has paid for all “labor relations advice and services,” not just the persuader services. While we have a good idea of what this additional report will entail, the DOL has not fully described its full scope and extent, and it is not scheduled to begin to do so until later in the year.
We do have some good news to report. Several companies and employer associations have already filed suit concerning the legality of this new regulation or have indicated that they will be doing so shortly. Almost all of these lawsuits will be seeking a temporary restraining order that, if granted, will keep these new requirements from going into effect during the pendency of the litigation. Chief among the arguments that either have been or will be raised is the government’s improper attempt to invade the confidences and information that has heretofore always received protection pursuant to the attorney-client relationship.
We are hopeful that these litigation efforts will prove successful. In the meantime, however, because there is now a definite effective date for these new regulations, we feel obligated to let you know what is at stake and how we may soon be required to conduct some of our attorney-client dealings. We will be communicating with you again in the very near future.
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